To Cut Costs in the Face of Declining Demand and Increased

question 40

Multiple Choice

To cut costs in the face of declining demand and increased competition,many fast food restaurants have focused on reducing:

• A)labor costs.
• B)utility costs.
• C)paper napkin costs.
• D)none of the above.

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Definitions:

Perpetual Inventory System

A method of accounting for inventory that records real-time transactions of goods as they come in and out of stock, thus maintaining a continuously updated inventory balance.

Periodic System

A method of inventory valuation for financial statements where purchases during the period are recorded directly to an inventory account and the cost of goods sold is determined at the end of the accounting period.

Purchase Discounts

A reduction in the purchase price, allowed by the seller to encourage early payment by the buyer.